Brochure: The 6 need-to-knows about Financial Investigation

The 6 need-to-knows about
Financial Investigation
Introduction
Organised crime poses a vast problem in the European Union.
Every year, many individuals fall victim to organised crime like
human trafficking - and smuggling, fraud, drugs-and arms
trafficking and terrorism. Committing crimes is a profitable
business: organised crime in the European Union alone generates
around 110 billion euro each year. Only a very small section of that
money is recovered by the authorities. Simultaneously a significant
amount of the proceeds of crime is laundered across the European
legal economy. Evidence of organised crime investment is found in
almost all EU Member States. This poses a threat to our societies
and this has to stop.
Financial Investigation is a very effective instrument in the fight against
organised crime and terrorism. In this brochure we will briefly explain
what financial investigation is, why investigating the financial trails
of organised crime and terrorism is crucial, the types of crime it can
be applied to and the preconditions to apply this investigation
method. In the last pages of this booklet you will find a case-study
that will illustrate Financial Investigation in practice and the
objectives the Netherlands Presidency would like to achieve.
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1 Definition of Financial Investigation
In financial investigations the movement of money and other values during
the course of a criminal activity is identified and documented. In most cases
criminals and terrorists need financial means to commit crime and
therefore leave financial trails. They have to make operational
costs, e.g. for the purchase and transport of drugs or weapons, to
cover personal expenses and to pay fees or salaries to accomplices.
As financial profit is often the main motivation for perpetrating
crimes the proceeds are spent on goods and laundered into the
economy frequently using legitimate companies and facilitators.
The financial and paper trails that all these transactions and
contacts leave are collected and analysed by the police and other
investigative authorities during an investigation and can be used:
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• to identify the extent of criminal or terrorist networks or the
scale of criminality;
• to develop evidence to be used to prosecute and convict
criminals;
• to identify and trace the proceeds of crime, terrorist funds and/
or any other assets that are subject to confiscation.
Financial investigation is an additional investigative instrument in
the law enforcement toolbox and can be deployed to get the
leading individuals from a criminal organization behind bars and to
take away their money and assets. Without the leading people and the
financial means it is very difficult to continue criminal activities. This makes
financial investigation a very effective tool in disrupting organised
crime and terrorism.
2 Financial Investigation can be applied to any type of crime
Financial Investigation can and should be applied to all types of serious and
organised crime such as human trafficking - and smuggling, fraud,
drugs-and arms trafficking and terrorism. A general misconception is
that financial investigation is confined to the fight against
economic crimes such as fraud, tax crimes, corruption or money
laundering. Only a minority of financial investigations are carried
out to collect evidence in criminal cases in various domains, or to
develop intelligence on criminal or terrorist networks. Also, the
financing of organised crime is often skipped in threat assessments
and strategic analyses of organised crime. This shows that the full
potential of financial investigations is yet to be understood,
developed and implemented.
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3Financial Investigation throughout criminal proceedings
Ideally, financial investigations are applied in all stages of criminal
investigations and judicial proceedings. From a proactive identification
of crime or criminal networks, to case investigations and evidence
building, up until prosecution and conviction of offenders and
asset confiscation. In many cases however, financial investigators
are only brought into a criminal investigation at the end stage in
order to trace and identify the proceeds of crime and to confiscate.
This is a missed opportunity. Financial investigations should start
the earliest opportunity possible: in the ‘golden hour’ of the
investigation. The initial period frequently determines whether an
investigation will succeed or fail.
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Crime
>
>
Pro-active
data
mining
and
financial
analysis
Identified
cases
Financial investigation
Source: Brown et al. (2012)
>
>
Crime prevention, risk analysis, policy formulation, etc.
Develop
intelligence
and case
building
(prearrest)
>
Collect
evidence
and case
building
(postarrest)
>
Prosecution
and
conviction
>
>
Asset
confiscation
4Wide-Ranging financial awareness is essential
Financial awareness is needed at all levels of the law enforcement system:
from basic financial awareness at community policing level to highly
specialist forensic accountancy expertise needed to unravel the ‘corporate veil’
behind complex cross-border money laundering structures. General
(community) policing can play a major role in detecting
unexplained wealth. It’s important that criminal investigators are
aware of the need to collect financial evidence at a crime scene and
to call in specialist financial expertise when needed. Moreover,
financial expertise among prosecutors and judges is crucial to
understand and assess the files prepared by the financial
investigators.
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5Cross-border is key to success in financial investigations
In an ever-globalizing world, organised crime and terrorism nearly
always crosses borders and so will the money trails that it leaves
behind. In financial investigation effective cross-border cooperation and
exchange of information between the involved authorities are
essential to achieve success.
6The importance of multidisciplinary cooperation
Besides cross-border cooperation, multidisciplinary cooperation is
important as well. When public authorities involved in financial
investigations such as law enforcement, public prosecutors, Financial
Intelligence Units (FIU) and tax authorities combine their expertise, work
together and share information, the best results are delivered. Moreover,
there’s an increasing awareness and wish that private parties such
as banks, real estate agencies and other professional service
providers could and should also provide valuable input in financial
investigations.
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Financial Investigation: a case-study
The Netherlands
Hungary
€
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Financial investigation
in human trafficking
Sexual exploitation is a lucrative business.
The human traffickers spent large amounts of
The recent Dutch-Hungarian ‘Wimber’ case
money in Hungary on cars, jewellery and real
shows the added value of using financial
estate to cover their traces. Dutch and
investigations as a method to combat crime.
Hungarian police investigated criminals’ finances
In this case a network of Hungarian criminals
to identify the magnitude of the crime and the
forced Hungarian women to work in the
links between the victims and perpetrators.
Netherlands as prostitutes. The criminals
remained in their country. Women were forced
A cross-border Joint Investigation Team (JIT)
to earn 600 to 700 euros a day. Money was
was established. This enabled investigators in
sent to Hungary by money transfer or cash
both countries to share financial information
transport.
easily. Tracking the finances has led to the arrest
of the suspects and confiscation of their assets.
Netherlands Presidency 2016
Financial investigation is a priority in the Netherlands Presidency of
the Council of the European Union in the first half of 2016 and is
also marked as a priority by the succeeding presidencies of Malta,
Slovakia and the United Kingdom. Our objectives are to:
- Facilitate the use of financial investigation in the fight against all
types of organised crime and international terrorism;
- Increase the knowledge and understanding of financial
investigation procedures and techniques among law
enforcement practitioners; and
- Improve cooperation in this field in cross-border investigations.
On the website of the Netherlands Presidency http://www.eu2016.nl
you can watch a video about Financial Investigation.
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Further reading
• Brown, Rick, Emily Evans, Sarah Webb, Simon Holdaway, Geoff
Berry, Sylvia Chenery, Brian Gresty and Mike Jones, Home Office,
Research report 65, The Contribution of Financial Investigation to
Tackling Organised Crime: A Qualitative Study, 2012.
• Financial Action Task Force (FATF), Emerging Terrorist Financing
Risks, 2015.
• Financial Action Task Force (FATF), Operational issues financial
investigations guidance, 2012.
• GENVAL, Final report on the fifth round of mutual evaluations
- Financial crime and financial investigations, 2012.
• Organisation for Economic Co-operation and Development
(OECD), Effective Inter-Agency cooperation in fighting tax crimes and
other financial crimes, 2013.
• Organisation for Economic Co-operation and Development
(OECD), International cooperation against tax crimes and other financial
crimes: A catalogue of the main instruments, 2012.
• Savona, Ernesto and Riccardi Michele (eds.), From illegal markets to
legitimate businesses: the portfolio of organised crime in Europe. Final
Report of Project OCP – Organised Crime Portfolio, Trento,
Transcrime, Università degli Studi di Trento, 2015.
• Slot, Brigitte, Linette de Swart, Erik Merkus, Edward Kleemans,
Michael Levi, Needs assessment on tools and methods of financial
investigation in the European Union, Final report in commission of
WODC and Ministry of Justice, Rotterdam, Ecorys, 2015.
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Dit is een uitgave van:
Ministerie van Veiligheid en Justitie
Postbus 20301
2500 EH Den Haag
070 370 79 11

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